Budget reaction: Credit insurance good, all else bad

Budget 09 Reaction to Alistair Darling's budget is mixed to say the least. Even the £2,000 subsidy for people buying a new car and scrapping an old one has had a mixed response from the motor industry.

The Federation for Small Business welcomed help in training young people but said: "We are very disappointed that this budget will do nothing for those firms which are doing their best to hold on to their valued employees. A Government-funded wage subsidy for short-time working would have been a real help but was totally ignored.

"Small firms will also be disappointed not to have received the benefit of automatic rate relief. This will have boosted small businesses to the tune of £400m."

The FSB welcomed the increase in capital allowances but regretted that nothing was done to combat late payments. The FSB wants Companies House to name and shame firms which do not pay on time.

The Confederation of British Industry, speaking for larger businesses, said the Chancellor's forecasts were optimistic and he was taking too much of a risk by delaying balancing the books to 2018.

Richard Lambert, CBI Director-General, was blunt: “The key question for this Budget was whether it set out a credible and rigorous path for restoring the public finances to health. The CBI’s preliminary judgement must be that it does not."

Even the car industry had mixed views on the "cash for bangers" scheme to offer £2,000 subsidies to people scrapping ten year old cars in order to buy new vehicles. The scheme runs to March 2010, but even this had a mixed reaction.

Car sales group the Institute of the Motor Industry gave half-hearted support and hoped the scheme would boost new car sales.

The £2,000 subsidy is actually divided between government and industry, with a grand coming from the government and a grand from almost bankrupt car manufacturers. So that rustling noise you can hear is every car salesman in the land slapping an extra £1,000 on the price of the new cars on his forecourt.

The RAC noted that with the government pledging £300m, up to 300,000 people could benefit.

RAC Foundation director Professor Stephen Glaister said: "Currently the vast majority of cars are still on the road at ten years old. Indeed at 14 years old, half are still on the road. The scrappage scheme announced today risks consigning a lot of perfectly good, and relatively clean, vehicles to the dustbin."®